Dealing mainly with economic and business policy in London

September 24, 2008

Resignation of James Bidwell as CEO of Visit London

The resignation of James Bidwell as Chief Executive of Visit London essentially completes the destruction by Boris Johnson’s administration of the world class marketing and promotion apparatus built up for London during the period Ken Livingstone was Mayor of London. This was a marketing machine which generated many hundreds of millions of pounds worth of business for the capital. As current events show vividly what is wrong with Boris Johnson’s administration’s policies it is worth looking at in detail.

Tourism is one of London’s most important industries. On a conservative estimate it generates £16 billion a year for London’s economy and employs over 250,000 people. Prior to Ken Livingstone becoming Mayor, however, it received nothing like the attention its importance merited. The London Tourist Board (LTB) which existed prior to Livingstone becoming Mayor had a budget of £1.5 million a year. The LTB was actually competently run by the people who staffed it but with these resources naturally it could only achieve very limited results.

Ken Livingstone totally changed that approach. Funding to the new Visit London, which replaced the old tourism board, was raised tenfold and its Board entirely reorganised. Top marketers were brought in to run it. The first was David Campbell, who had built up Virgin Radio and is now head of Anschutz Entertainment Europe and head of the O2 - the latter now making a tremendous contribution to London’s visitor offer and currently the world’s most visited entertainment arena. Visit London’s second chief executive was James Bidwell – who was formerly marketing director of Selfridges, which had succeeded in radically modernising its brand image under his marketing direction.

The benefits to London’s economy and businesses of this transformation were huge. Tourism is an industry in which every destination naturally tends to lose market share simply because every year there are more competitors to visit. London however first slowed and then reversed this trend by raising its market share for two years in a row. In 2007 the extra spending by tourists was worth over £600 million to London’s economy – enough to support many thousands of jobs.

Naturally not all this increase was due to Visit London’s activity – although the increase in world market share probably was. Visit London won innumerable third party marketing awards. It was generally regarded, together with Singapore and India, as the top tourism marketing agency in the world.

On top of Visit London’s success a new strategic promotion and marketing agency for London, London Unlimited, was created which Bidwell also ran on a day to day basis. This brought together Visit London with London’s inward investment promotion agency Think London, Film London – which promotes London’s film industry, and London Higher – which exists to promote London’s higher education sector including to foreign students.

One of the Boris Johnson administration’s first actions on coming to office was to abolish London Unlimited – the organisation was closed and all its staff dismissed. Boris Johnson’s administration then asked for £1.5 million to be cut out of Visit London’s budget with more to follow.

This meant doom for London’s top level marketing and promotion. Advertising, marketing and promotion is one of the most competitive industries in the world - because it yields big economic results. Its top practitioners are therefore able to command salaries into many hundreds of thousands of pounds a year – a very good investment for their employers as they yield results which are worth many tens of millions of pounds.

As always with a high profile, and highly paid, departure the official press release about Bidwell’s departure will all say it is nothing unusual and express mutual admiration. James Bidwell himself is much too smooth an operator to do anything to ruffle any feathers unnecessarily. But the reality is that no top rank person in this industry would accept to head an organisation whose strategic marketing function has already been abolished and whose budget is under senseless attack. James Bidwell is no mug but is a top figure in the marketing profession and doubtless wishes to keep a reputation for being so – something which is not achieved by being in an organisation condemned to decline by the policies of the new London administration.

This result does and will illustrate perfectly what is wrong with Boris Johnson’s administration. It claims it stands for ‘value for money’ but in the real world stands for the exact opposite. Value for money has a precise business and economic meaning. It means the ratio of benefits to costs. If £3 million is spent on something and the benefit is £15 million that is very good value for money – a net benefit of £12 million and a 5 to 1 benefit cost ratio. If instead costs are cut to £1 million and only £3 million got out that is not a ‘saving’ of £2 million – the cost reduction. It is actually a loss of £10 million – due to the fall in income. The second is cheaper but much worse value for money because the benefit cost ratio is only 3 to 1. It is because benefits exceed costs than companies invest.

Everything which Boris Johnson’s administration lists under ‘value for money’ on the Greater London Authority website is something different – cost cutting. Cost cutting does not equal value for money, or even ‘saving’ at all. If a travel agent abolishes their advertising budget that is certainly cost cutting but it is terrible value for money because they will lose far more customers!

What is occurring with Visit London is a terrible waste of money. At most a few million pounds will be saved but at a loss to London’s economy, through a decline of its world class promotion and marketing apparatus, of tens of millions of pounds – more probably hundreds of millions. When Ken Livingstone returns as Mayor one of his first jobs must be to rebuild the world leading marketing and promotion apparatus which created huge benefits for London’s economy and which it has only taken Boris Johnson’s administration five months to essentially destroy.